Financial advisers who are considering leaving the industry due to incoming education reforms should instead look at restructuring their business to focus on helping clients understand the behavioural psychology of money, according to an award-winning adviser.
Speaking as part of Advice Intelligence’s (a.i.) Goals Based Advice Podcast. 2017 AFA Female Excellence in Advice winner Lea Schodel said there was an opportunity for advisers to broaden their service offering to encompass money coaching. This has been successful in the US for over 20 years and could help engage more people who are not currently receiving advice.
“As an industry, we should view the upcoming changes as an opportunity to look at how we can adapt existing businesses in a positive way. The industry should see a transition from traditional advice to money coaching as an integrated new approach rather than leaving the industry,” Schodel said.
“In Australia, there is currently a gap in the financial planning industry when it comes to the pre-advice stage or money coaching. With advice industry changes, there is an opportunity to shift momentum towards attracting consumers who are not currently engaged with their financial future. Coaching them on money skills would set them up to have a more positive relationship with a financial adviser.
Despite the amount of information that is available online on how best to manage money. The majority of consumers still do not know how to apply this to their personal financial situation. A money coach brings value in helping people to create awareness around their financial traits, by understanding their key motivators, patterns and behaviours with money.
“We need to focus more on the behavioural aspects of people’s relationship with money. How do we get people to understand their key motivators and goals? How do people define success and financial wellbeing?” Schodel said.
“Without having an understanding of these behavioural aspects, people are unlikely to be able to manage their behaviour and emotions and therefore have difficulty in achieving their financial goals.”
This approach can prepare consumers with the tools necessary to engage further with a financial adviser, without money coaches needing to be licensed to provide personal advice. Advisers not wanting to complete the FASEA education standards could therefore remain in the industry as a money coach. They can work in tandem with, or further refer clients to advice professionals that are licensed to provide advice.
“We think there is a great opportunity for advisers to offer money coaching within their advice offering. Helping clients realise their life goals, and understanding their behaviours toward money, directly impacts their chances of achieving their goals. Integrating technology into this experience also enables their wealth journey to be brought to life.” says Advice Intelligence Founder and CEO, Jacqui Henderson.
“The advice space is at a point of evolution - there is opportunity to be gained in this change.”
a.i. has seen immense interest in money coaching and goals-based advice through its Goals Based Advice Podcast. With over 2,000 unique downloads since its launch in October. The podcast features insights from new generation advisers and subject matter experts on how to put client goals and behaviours at the centre of the financial advice experience.
